SEC Charges Texas Financier With Massive Fraud

The government has accused Texas financier Robert Allen Stanford of duping tens of thousands of investors. The SEC has charged Stanford and his companies with lying about returns on offshore certificates of deposit and a mutual fund program. The fraud is alleged to total more than $9 billion.

Ronald Allen Stanford is a wealthy Texas financier. He attracted investors with certificates of deposit that paid well above what others were offering. Now the Securities and Exchange Commission says he presided over a multibillion-dollar fraud. And if these all sounds familiar, yes, Stanford is being compared to Bernard Madoff. The government has now taken over Stanford's operations, as NPR's Wade Goodwyn reports from Dallas. [POST-BROADCAST CORRECTION: The Texas financier's name is ROBERT Allen Stanford.]

WADE GOODWYN: Having suffered months of humiliating accusations that the Securities and Exchange Commission was asleep at the regulatory switch, yesterday federal agents roared up in tinted Chevy Suburbans and raided the offices of Robert Allen Stanford's companies. Stanford is a Texas entrepreneur who made his initial fortune in Houston real estate. He's now accused of duping tens of thousands of investors out of billions of dollars. Most of the alleged scheme involved what the SEC branded, quote, self-styled certificates of deposit sold by Stanford International Bank. Whenever a federal regulatory agency uses the word self-styled to describe a financial product you've invested in, it's not a good day.

The SEC alleges that like financier Bernard Madoff, Stanford consistently supplied investors with false information and unrealistic returns. Some investors said they were getting CD rates as high as eight and a quarter percent. Stanford's companies have allegedly resisted the federal government's attempts to account for the billions of dollars that were supposedly in safe liquid investment vehicles. The Texas billionaire's whereabouts are unknown.

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Correction Feb. 18, 2009

In the introduction to this story, we mistakenly identified the person under investigation as "Ronald Allen Stanford." His first name is Robert.